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Downsizing Blog

When the Solyndra scandal broke in September, I wrote that “Republicans should be careful when casting stones given their past and present support for energy subsidies.” The left has been ripping congressional Republicans for making political hay of the Solyndra affair after having lobbied the Department of Energy to bestow their constituents with similar taxpayer handouts.

The details surrounding the $535 million government loan to Solyndra – the now-bankrupt solar energy company that had been the green apple of the president’s eye – are still emerging. It remains to be seen whether or not the Obama administration broke any laws when it pushed the loan out the door despite obvious problems with the company’s finances.

An op-ed in the Wall Street Journal written by the American Council for Capital Formation’s Margo Thorning makes a good case for “pulling the plug” on subsidies for electric vehicles. Subsidies for alternative energy vehicles have been popular with both Democrat and Republican administrations, but the Obama administration has been a particularly enthusiastic supporter of industrial planning.

The other day, The Wall Street Journal provided a public service by lambasting Newt Gingrich for his absurd speech to the ethanol lobby in Des Moines last month (money line: “Obviously big urban newspapers want to kill it because it’s working, and you wonder, ‘What are their values?’”). Today, Gingrich and fellow ethanol-maven James Woolsey struck back in those very same pages. In doing so, Gingrich provided yet more evidence that he’s intellectually unfit for office.

In 2006, Michigan Gov. Jennifer Granholm told citizens, “In five years, you’re going to be blown away by the strength and diversity of Michigan’s transformed economy.” When those words were uttered, Michigan’s unemployment rate was 6.7 percent. It’s now almost 13 percent.

An essay from economist Arnold Kling in the latest Cato Policy Report discusses what Kling calls the “knowledge-discrepancy problem.” This occurs when knowledge is dispersed but power is concentrated, and it is particularly acute in government.

The economy remains weak and the administration’s stimulus has been a bust. To counter the growing unpopularity of his economic policies, the president is traveling around the country handing out government checks to anointed industries.

OMB Director Peter Orszag is blaming the inefficiencies of the federal government on outdated personal computers. That is hard to understand given that federal IT spending amounted to $200 million a day last year.

A couple of weeks ago I wrote about a story in Wired regarding the Department of Energy’s Advanced Technology Vehicles Manufacturing Loan Program. The gist was that government subsidies to particular manufacturers are putting non-recipients at a competitive disadvantage in obtaining private capital. The author, a former Tesla Motors official, noted that “this massive government intervention in private capital markets may have the unintended consequence of stifling innovation by reducing the flow of private capital into ventures that are not anointed by the DOE.”

In 2007, the Advanced Technology Vehicles Manufacturing Loan Program was created in the Department of Energy to support the development of advanced (i.e., “green”) technology vehicles. Last year Congress appropriated $7.5 billion to support a maximum of $25 billion in loans. So far, the subsidies have been dished out to Ford ($5.9 billion), Nissan ($1.6 billion), Tesla Motors ($465 million), and Fisker Automotive ($528 million).